Thursday, May 7, 2015

Freedman's Freehold


EDIT:  It's a double-packed Freedman news update here at OTLSS!

Very recently in a discussion concerning Law School denialism, a debate raged over whether hyperbole can be properly utilized as humor to drive home a point, on the one hand, and Godwin's law, on the other, where certain subjects are so taboo that they can never be referenced, ever, and it all becomes a game of "You Can't Say That on Television."  Predictably, the philosophical stance varied by which side of the fence you were on, and I admit to my own bias in the debate as a scamblogger.  During the back-and-forth discussion of what is allowed to be said is not "as bad as" what, and who is or isn't a monster, however, an actual important issue rose to the top:


Steven Freedman and AnotherSeniorLawProf - this is a posting from the website "outside the law school scam." I think you should both read this and consider what the real life consequences are a very high proportion of the students recruited to law schools. This posting was made partly in response to the debate where Freedman is feigning outrage at Campos' comments and AnotherSeniorLawProf thinks is just a source of amusement. Perhaps before either of you trivialise what has happened to so many graduates you will read this. Better still you will show it to your children and say - "this is what daddy does to some people" and ask, is the outrage misplaced? I have replaced some of the profanities to make it past the filter, but they seem appropriate:
_____________________________

"Law school destroyed my life. The debt just grows, because I cannot pay it down. My situation is so untenable, I cannot even bring myself to speak about it any detail anonymously. It has not yet taken my life, but I expect it to at some point when I simply do not have yet another monumental effort left in me. What has not yet killed you does not make you stronger, it makes you tired.

A history of monumental efforts is the shared history of any poor student who has had to fight to get an education in shit public schools, fight to afford undergrad, working the whole time, and survive through all the attendant social difficulties that lands families in poverty in the first place.

These "professors" and the principals of these "schools" are F******G. SC*MB*GS.

The now-relentless targeting of the poor - because that's the common theme, not skin color, poverty - with promises of good jobs, economic safety, and power in society by these f******g evil, lying, predatory mother f*****rs, in combination with a set of carefully designed, fully intentional federal laws that are 100% punitive in the treatment of debt (that allegedly exists for the benefit of students) makes me want to see this country end.

How in god's name did we get the point of government-assisted fraud that lures POOR students with a ***hope of rising out of poverty*** through their own efforts that is guaranteed to keep the poor in poverty for the rest of their lives?

I watched the very same thing happen to my friends who were not from wealthy or even stable families, some of whom had no living parents get fucking scammed by one of the schools featured above. It destroyed their lives too.

***

Of course I'm on IBR, but I wonder why I even bother be on it as opposed to defaulting. I cannot keep the interest from growing the balance - an interest rate which per the government is negatively subsidized at 6% (meaning 6% is the profit margin).

The terms of wage garnishment in event of a default are identical to IBR - exclude poverty level from the gross, sliding, income-based scale up to 15%. Why bother anymore?

IBR is semantics. It exists to keep money flowing to schools that should not be receiving it because the default rate among their recent graduating classes is too high.

I will never be credit-worthy carrying this balance, although I have no other debt. I had a car loan once that I paid off. I never used credit cards. I've worked since I was 12 years old. My paper route was feeding my family. I have always been the working poor.

Move on to what?

A combined, state, federal, IBR tax rate of 50% which ensures I will always be the working poor? I cannot get married, because of the government moving to consider a non-debtor spouse's income in IBR. I will never be able to afford to have children. I will never own a major asset.

What am I living for?

Am I living for the consent financial stress that I have no reasonable basis to believe will ever abate? I'm unable to afford the doctor when I get sick. The government promises to garnish my SSDI should I become disabled, and my SSI should I ever retire.

So, why keep doing this?

To pay back money that flowed to a fraud outfit, at a price that was inflated and inflated under me massively over 3 years because of uncapped GradPLUS loans? To pay interest that was never lent to me that is7%+ in excess of the risk-free rate when I cannot declare bankruptcy or even default?
This is insane. Sooner or later, it's enough and you just quit."

Posted by: Lurker | April 25, 2015 at 05:45 AM


One of the constant messages of the scamblog movement is how the scam impacts real people.  It is easy to get lost in discussions of how many graduates are too many, whether or not the legal market is improving, what the true "premium" of the JD degree is, should law schools reduce costs, is student debt "as bad as" everyone says it is, etc. etc. etc.  Notice that all of these discussions are, at some level, high-flying and impersonal.  Yes, the outcome of these discussions have real-world, practical implications, but it is easy to ignore the actual human impacts like those above when discussing things from a "policy" perspective.  Such is the Ivory Tower, though, and its general insulation heretofore from real-world effects and externalities.

All of this makes the "academy" response from Steve Freedman all the more troubling:




 Steven Freedman

@ Lurker

Of course I sympathize with anyone who is struggling financially due to student loans or any other kind of debt or hardship. I wish law school was a guarantee for a successful career and life, but obviously that is impossible. I've had friends like the poster for whom law school did not work out very well, with debt adding to their worries. But for every story like the poster's, I can share a far greater number of stories from alumni and friends who found success after attending law school.

Not to turn this into a debate over IBR [but let's do exactly that very thing, Ed.], but I should note that this post raises a few issues, many related to a misunderstanding of IBR and how substantial the benefits are. The poster minimizes the benefits because IBR "only" reduces loan repayments to 15% of monthly income minus 150% of the poverty line. In fact, this is a huge advantage to borrowers.

For example, let's take the example of someone who borrowed $200,000 and is struggling to make it. Let's say all they've found is temp and contract work making $35,000 per year. Without IBR and without extending the loans, this person's monthly loan repayment would be an unsustainable $2,310 per month. With IBR, it's $145 per month. Let's say the person does a bit better and makes $50,000 per year. The monthly repayment would rise to $270 per month. These are hardly draconian monthly payments. (note: all these estimates were made by using the student loan calculator found on the DOE website at studentloans.gov). While underpaying will result in additional interest accruing, all principal and interest is forgiven after twenty years. Depending on the size of the loan forgiveness, there could be a substantial tax impact.

Also, the poster is wrong about how marriage will affect his or her loan payments. Since 2010, borrowers have had the option of including or excluding spousal income from the repayment calculations. So he or she should feel free to get married without worrying how this will affect his payments.

I'm not trying to minimize the poster's distress, clearly he or she is facing stress related to debt and the poster's apparent failure to find success in his or her career. I wish the poster the best of luck and am thankful IBR is there to help individuals like the poster.

Posted by: Steven Freedman | April 25, 2015 at 10:46 AM


EDIT:  Here is another discovered gem from 2012:

So here's a fair analysis of why I think Kansas Law is a good value and a good decision for folks who want to start a career with a law degree.

The average debt at graduation for a Kansas Law student is $67,598. With a ten year repayment schedule and a 6.8% interest rate, the monthly debt payment for a student is $777. If you committed 15% of your salary to loan repayments, you would need an average salary of $62,233 to afford that payment. It would be tight, but it would certainly be doable. 

But what if you don't average $62,233 per year? Well, most students consolidate their loans into 30 year loans. It's true that you'll end up paying more in interest over the course of the loan. But if you look at the math, you might agree that it makes sense to do this. If I change the number of years to 30 years, the monthly loan payment drops to $440 per month and you only need to make $35,255 to afford the loan repayments assuming you direct 15% of your salary to loan payments.

Even in this really tough market, I don't think it's a stretch to tell someone that they have a very good chance of averaging $35,255 - $62,233 in salary during the first ten years of their post law school career. (note: all of these calculations come from using the calculator available at http://www.finaid.org/calculators/loanpayments.phtml). 

So that's a financial analysis of why attending the University of Kansas School of Law can be an affordable option. Next I'll close with some thoughts on folks who don't make a lot of money as attorneys - but still love what they do. (cont'd)



In the midst of the previous ideological war between figures-of-speech (Campos) and literalism (Freedman), when confronted with a new challenge, Freedman immediately switches to well-rehearsed talking points from human cost (scamblogs) to IBR (academy).

Of course Freedman laments the current state of affairs - after all, while he may be eminently qualified to call out monsters, he is most certainly not a monster himself, right?  But hey, he personally has more people in his rolodex who are successful compared to those who aren't, so everything's fine.  That is otherwise known as survivorship bias, and one would expect a little more self-monitoring than that from an educated academic.

But if one must continue to complain, as the "whiny" poster above does, all one must do is merely apply IBR like a vertiable balm of Gilead.  Viola!  Life restored!  Good as new!  In fact, better than new, thanks to that shiny JD!

Freeman sidesteps the effects that IBR has on borrowers (e.g. there "could" be a substantial tax impact, but don't worry), their family planning prospects (hey, "feel free" to get married, and you have the option to just ignore spousal income, if any...unless he or she is on IBR, too), or that IBR does not apply to private student loans (which thousands upon thousands of borrowers for law school currently have).  He's "thankful" that IBR is there to "help" individuals, and, frankly, who wouldn't when their careers depend upon it - it sure is a plus to have the taxpayer subsidize his salary along with the students themselves.   Spread the risk, as they say.  Further, the idea that IBR helps sustain a faltering system, and does not cure the underlying ills (after all, $270 month for twenty years, which rises as income rises, is hardly a "draconian payment," per Freedman.  Of course, not everyone can have a law dean job.), is lost on the academy for highly predictable reasons.

Or why not just spend 15% of your disposable income at $440/month for 30 years or $777/month for ten years?  Easy!  You'll be earning a whopping $35k-$62k for that awesome-sauce JD, with an "average" indebtedness of $67k!  Of course, let's not muddy the waters with cost-of-living, undergraduate debt, or other life-related expenses (spoiler: everybody has these).

And let's not forget that the broader economy takes a rather dim view of IBR.  For reasons that are clearly inscrutable [that was sarcasm, law schools.  Ed.], students are still having trouble making their payments, IBR or not, and the future does not look bright.  Moody's has no incentive to candy-coat this, as opposed to certain schools who find (Cough cough KU Law cough cough) that a full third of their graduates fail to obtain JD-FT jobs.  Hey, some schools do better, some do worse, so it's not "as bad as" that, right?  Tell that to thousands of struggling graduates.

So, on the one hand, Freedman feels free to call-out his critics, when those critics try to say that their point was not "as bad as" that, and further state that this behavior is damaging to others.  On the other hand, when scambloggers and critics call Freedman out for his position regarding debt and real-life student outcomes, and how that is also damaging to others, he (predictably) responds with, "Hey, it's not 'as bad as' that!"

No hypocrisy there, no sir.  Friends, these are your pro-scam-LawDeans and your pro-scam-LawProfs at work.  This is how they think.  This is how they act.  This is how, beneath a thin veneer of concern, they honestly Don't Care.  They are not disinterested parties, though wolves-in-sheeps-clothing will always claim that they are.

Corinthian Colleges is hauled before the courts for their predatory behavior.  Law Schools, on the other hand, are given a pass, by those same courts, for the same behavior.   All we can say to prospective "sophisticated consumer" 0Ls is: beware.


16 comments:

  1. Freedman is correct in noting that one of the paths through the law school sorting machine has always led to a loser's bin. He is disingenuous in failing to acknowledge that, at the vast majority of schools, that bin is a lot more full than it used to be. And then there is the matter of the costs associated with failure. For many (including the poster above), law school is a mistake from which they will never recover. That wasn't the case 15 or 20 years ago.

    In any event, one piece of good news. Charleston Law may be closing up shop.
    http://www.charlestonbusiness.com/news/54429-law-school-officials-might-discontinue-admissions

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    1. Your last sentence is absolutely correct. I graduated over twenty years ago and the debt was at least possible to pay off. Today, it seems like a runaway train with the huge debt and the interest that never stops. That's why programs like IBR and PAYE were created.

      Delete
    2. Plus, the salvage value of a law degree was a lot higher back then. You were still a college-educated professional, and other employers were at least willing to consider you for employment. That has changed in a big way; now, failure at a law career can lead to absolute personal destruction.

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    3. Imagining The Open ToadMay 7, 2015 at 8:32 PM

      @ 2:10 - Huh?

      Haven't you heard? A law degree is versatile. With your law degree (like so many others) you could obviously become a Senator, or a major league team owner, or even royalty of a foreign nation.

      Get with the program.

      Delete
    4. How would you like to be a student at Charleston when it "discontinued admissions"? Don't expect much from professors, staff, or institution when the doors will be closing in two or three years. When the ship begins to sink, everyone runs for the lifeboats.

      Delete
  2. "I wish law school was [sic] a guarantee for a successful career and life, but obviously that is impossible."

    The issue, though, is that law school, for many people, creates a guarantee of failure in both career and life.

    "I've had friends like the poster for whom law school did not work out very well, with debt adding to their worries."

    No, Freedman, you have not. No friend of yours has ever been in that position.

    "But for every story like the poster's, I can share a far greater number of stories from alumni and friends who found success after attending law school."

    In other words, the poster's woes count for little.

    "While underpaying will result in additional interest accruing, all principal and interest is [sic] forgiven after twenty years. Depending on the size of the loan forgiveness, there could be a substantial tax impact."

    The payments, though substantial, would not even cover the interest, so the balance would balloon. The "substantial tax impact" would mean a bill for several hundred thousand dollars after twenty years of significant payments.

    "Also, the poster is wrong about how marriage will affect his or her loan payments. Since 2010, borrowers have had the option of including or excluding spousal income from the repayment calculations. So he or she should feel free to get married without worrying how this will affect his [sic] payments."

    This sounds like "Let them eat cake". Aristocratic Freedman is divorced from the concerns of real-world people. He says that the poster "should feel free to get married". But who is going to marry someone whose career, income, and very life have all been destroyed by unmanageable debt? And how could the debtor afford the expenses and obligations of support that attend marriage?

    "Even in this really tough market, I don't think it's a stretch to tell someone that they have a very good chance of averaging $35,255 - $62,233 in salary during the first ten years of their post law school [sic] career."

    But that person would have had a very good chance of averaging $35k during ten years without going to law school.

    "So that's a financial analysis of why attending the University of Kansas School of Law can be an affordable option."

    The question is not whether it is "affordable" but whether it is reasonable. And the answer is a resounding "no".

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  3. Did anyone read the recent news story about the former Auschwitz accountant, 93 years old, who is being prosecuted on 300,000 counts as an accessory to murder? And all he did was record the money and belongings taken from the inmates!

    I suppose that illustrates the principle that once a fanatical movement has taken everything a person has, it really doesn't care what happens to that person. Financial genocide has its rewards. Physical genocide is merely an afterthought.

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  4. I am the OP of the guttural cry you republished above.

    Steve Freedman: thanks for making me smile. You are correct, I am huge loser! This should greatly concern you…

    “I wish law school [were] a guarantee for a successful career and life, but obviously that is impossible.” Per 34 C.F.R. § 668, Subparts M, N; loser graduates ARE your problem; your law school and many others are screwed if your graduates formally “default” in significant numbers within 3 years of graduating.

    “No[w] to turn this into a debate over IBR…”
    Your argument is that 15% is a relatively small percent of 100%. Sweet! Help me out, what's 15% of nothing? I repeat, IBR’s monthly obligation is identical to the wage garnishment rule in event of a default. IBR does nothing for me, but it does something for my law school: I incur the obligation for additional interest which keeps my loan from being counted in my school’s Cohort Default Rate. Tidy little micro-scam, that. See, 34 CFR § 682.200, definition of “default.” I do not think I should subsidize the overly-good reputation of law schools when it comes to their default rates.

    “Also, the poster is wrong about how marriage will affect his or her loan payments. Since 2010…” Obama administration proposes to eliminate married-filing-separately rule, as do Congressional Republicans. Laws change.

    I think law graduates should find strength in numbers, pull a 'Corinthian 100,' and formally default. Were a sufficient number of grads from any 1 school to do so, that school would lose the ability to take further federal funds, close, and thereby we could engage in some self-help on the glut of supply. Plus, debtors get to rehab a default if they act quickly, because there are a whole lot of losers out there! Want to play, Steve?

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    1. OP, the day of reckoning is eventually going to happen because of larger numbers of defaults, particularly from undergraduates because there are so many of them. Based on the numbers alone, more law graduates need to band together and try to intentionally crash the student loan system so we can rebuild our lives.

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  5. A while back I wrote a comment on Inside the Law School Scam which DupedNonTrad quoted on his former blog (which means I can find it easily :) and post it again here):

    "I'm someone who graduated from law school in the 1970s, and I can say that law school faculty have always been somewhere between utterly indifferent and outright hostile to the fate of the vast majority of their students - only those at or near the top of the class (top 10% .... as they themselves had been) were considered worthy of attention and support.

    But it didn't matter then the way it does now - law school was far far less expensive then, and student loans, to the limited extent they existed, were dischargable in bankruptcy.

    Only a fraction of my class (25%?) went on to make long term careers as lawyers, but no one's life was wrecked as a result of spending 3 years in law school.

    THAT IS NO LONGER THE CASE.

    But law school faculty willfully ignore that fact. From their point of view, the large majority of their students who have never made careers as lawyers don't deserve too. As long as their law school produces a small % of winners, they're doing their job correctly. But the hundreds of thousands of lives wrecked that the current set-up has produced should and hopefully will come back to haunt them soon."

    I'm re-posting it here because I think it's important to understand that, while yes law school has always been a 'sorting machine', in the past no one graduated from law school with hundreds of thousands of dollars (adjusted for inflation) of NON-DISCHARGABLE debt. Thus whether or not someone did very well in law school, no one's life was PERMANENTLY DAMAGED by going to law school.

    There is a huge difference between a wasted 3 years at a cost adjusted for inflation of a max of $60,000 in tuition (with any tuition loans being dischargable in bankruptcy) and a wasted 3 years with non-dischargable loans of $100,000 ++++++.

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    1. Imagining The Open ToadMay 7, 2015 at 8:42 PM

      Thanks. For the most part, it's also true for those of us who went in the 1990s. The "wild" amounts of debt I heard about then were classmates who borrowed 50K or (in wild cases, 100K) for their law school experience.

      A load to deal with? Yes. For the (in my opinion) smaller fraction who had such amounts of debt.

      Life-crushing? Not so much.

      Not like today. The rent is too danged high.

      Delete
  6. Wait, so Steve Feedman attended Temple University law circa 2001? Tough to get in back then, almost as tough as now. ...and the best gig he could get in 10 years is a titled position in the admissions office at Kansas. Jesus F. Christ.

    So, I want to know if Steve Freedman's salary, assuming he would be on IBR (safe assumption) would comfortably support the debt he encourages others to take on and pay off...today, 10 years into his career.

    Me thinks not. Me thinks Steve-o went to the dark side precisely because of a lack of opportunity for him in the conventional, legal employment world.

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  7. At Temple, only 21.7% of last year's graduating class got jobs in big firms or federal clerkships (http://www.lstscorereports.com/national/jobs/2014/). Does it make sense to take on $200k in non-dischargeable high-interest debt to attend a law skule from which only one graduate in four or five gets a job that might, at least for a few years, pay enough to support that debt?

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  8. Looks like he make approximately $90,000 dollars from the Kansas State employee website, not terrible, but by no means going to make you rich. And to think he could have made millions in big-law WTF happened to him:)

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    1. That much money for shuffling papers at the admissions office? Nice "work", if you can get it.

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  9. "Also, the poster is wrong about how marriage will affect his or her loan payments. Since 2010, borrowers have had the option of including or excluding spousal income from the repayment calculations. So he or she should feel free to get married without worrying how this will affect his payments."

    FYI, this is false advice. IRS regulations require that if you marry, you use "married filing jointly" tax returns if you want to use the student loan interest deduction. If you're single, you can deduct up to (I think?) 2500 of interest. If married, you and spouse are still limited to the 2500, so if your spouse is also paying student loan interest, you instantly lose a benefit in the student loan schema when you marry. Loan servicers calculate reduced payments based first on your tax return and then on alternative documentation if you tell them it's not reflective of your income. So if you file jointly to take advantage of the student loan interest deduction, they're going to see your spouses income and they will include it in the calculations. If you pass on it to file separately, you've gained at least 2.5k in annual taxable income as a result of marriage. Plus, my loan servicer asks for spousal information even if you file separately.

    And all of this glosses over that loan servicers do not normally show their work on calculating IBR payments. People who live in policy bubbles have no business commenting on how these things work out in practice based on statements and theories from the government when there are scuzzy third parties doing the actual servicing of the loans.

    So yes, getting married will likely affect your student loan situation.

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